In their article, A Model of the Distribution of Branded Personal Products in Jamaica,* John U. Farley

In their article, €œA Model of the Distribution of Branded Personal Products in Jamaica,€™€™* John U. Farley and Harold J. Levitt developed the following model (the personal products considered were shaving cream, skin cream, sanitary napkins, and toothpaste):

Where

Y₁ = percent of stores stocking the product

Y₂ = sales in units per month

Y₃ = index of direct contact with importer and manufacturer for the product

Y₄ = index of wholesale activity in the area

Y₅ = index of depth of brand stocking for the product (i.e., average number of brands of the product stocked by stores carrying the product)

X₁ = target population for the product

X₂ = income per capita in the parish where the area is

X₃ = distance from the population center of gravity to Kingston

X₄ = distance from population center to nearest wholesale town

a. Can you identify the endogenous and exogenous variables in the preceding model?

b. Can one or more equations in the model be estimated by the method of least squares? Why or why not?

Transcribed Image Text:

|Yli = a1 + B1 Y2i + B2Y3¡ + B3Y4¡ + U ]i | Y2i = a2 + B4Y1; + B3 Ysi + yı X1i + y2X2i + u2i Y3i = a3 + B6 Y2i + Y3X3¡ + u3i Y4i = 04 + B7Y2¡ + Y4X4¡ + U4i |Ysi = as + Bs Y2i + B) Y3i + B10Y41 + us; %3D